Massive online learning and the unbundling of undergraduate education

Is free online learning going to put traditional colleges out of business? For a college professor, it’s hard to read the news these days and not worry about this threat. For one thing, the businesses of journalism, publishing and music, all decimated by the internet, bear uncomfortable similarity to that of higher education. In each case, valuable intellectual property is threatened by free online copying and distribution.

For another, the industries of health care, higher education and (formerly) housing all share another uncomfortable similarity: in an era of stagnant household incomes, their costs are inexorably rising, leading to ever-increasing indebtedness. Simple arithmetic suggests that this can’t go on forever. As long as the cost of college keeps rising, the pressure to find a free, Napster-like alternative is going to keep building.

Of course, I’m convinced that higher education is a valuable product worth paying for. But I believe that these two forces—the internet and rising costs—are going to fundamentally change what most college professors provide their undergraduate students. (For now, I’m going to set aside the questions of research and graduate education.)

The basic way that these forces are going to change undergraduate education is by forcing an unbundling, or disaggregation, of the goods that colleges have traditionally provided their students in one big bundle. This unbundling will happen in three ways: for the whole college education, for the individual course, and for the way that college is paid for.

1. Unbundling the college education

A college education has traditionally bundled several different kinds of goods together:

The curriculum: mastery of specific knowledge and development of more general reasoning, analytical, and communication skills.

The extra-curriculum: a network of friends and contacts, and experience gained from clubs, sports, internships and other activities.

The signaling process: validation of general talent or status by completing all of the above at a “better” or highly ranked college.

The college experience: everything that is personally interesting, enjoyable or rewarding about living in a certain place with certain people, and having experiences that are personally valuable to the college student, regardless of their value to anyone else or to society at large—everything from late-night conversations about the meaning of life, to road trips, to pranks, sports rivalries, and “school spirit.”

Traditionally, colleges provided all of these goods in a bundle, simply because the best way to provide them was to expensively gather a lot of students, faculty and resources in one place for several years at a time. But now, with the internet, is the logic of bundling starting to break down?

I think it’s immediately apparent that the first type of goods—the curriculum—is by far the most vulnerable to disruption from the internet. Highly self-motivated students (i.e., Abraham Lincoln) have always been able to teach themselves, given the resources, and the internet is simply going to accelerate and expand this opportunity to anyone in the world who has an internet connection. This is where the disruption of higher education is going to parallel that of journalism, publishing and music.

My hunch, however, is that the second, third and fourth types of goods are going to be affected very differently. For these, there is simply no substitute for being in the right place with the right people. It’s the same reason why places like New York and Silicon Valley become ever more expensive to live: in certain cases, you just have to meet people in person. So, to the extent that colleges provide 2, 3, and 4, they are going to continue to thrive, regardless of what happens with 1. Ambitious students are always going to want to be in the right place.

The catch is that only a small minority of colleges—the “top” colleges—really do a good job at providing 2, 3, and 4. The vast majority of colleges mainly provide 1, and these colleges—i.e., most of them, the “typical” colleges—are most vulnerable to disruption and transformation. For a long time, the typical American college has been preoccupied with “rising in the ranks” by spending a lot on facilities and faculty, and trying to attract better students, in hopes of providing more of 2, 3, and 4 in the manner of the top colleges.

I think this pursuit is going to be abruptly curtailed by ever-rising costs and indebtedness, and by the finite nature of these resources. There are only so many top students and top faculty to go around. Only ten colleges can ever be in the top ten. For the typical college, a wiser strategy is to focus on providing 1. at a better value, embracing the disruptions and transformations of the internet. But how exactly is this disruption going to work?

2. Unbundling the invididual college course

A college course can be unbundled into two separate functions: first, there is the transfer of knowledge to the student, and second, there is the evaluation and feedback of student work. Knowledge transfer consists of all the information that a course provides to a student, which may be delivered in any medium: through assigned readings, lectures, websites, videos or otherwise. Evaluation and feedback consists of seeing what students can do, and telling them how they can do it better, whether through exams, papers, projects, or otherwise.

The internet’s transformation of knowledge transfer is rapid, vast, and well underway. Its transformation of feedback and evaluation, however, is much less certain and proceeding more slowly. The sudden, enormous and rapidly increasing popularity of massive open online courses, or MOOCs, has justifiably gotten a lot of attention. Much of this attention, however, fails to distinguish between these two aspects of a college course.

With MOOCs, now anyone in the world with an internet connection can download and watch lectures from eminent experts at top universities, for free, and hundreds of thousands have done so. This is indeed a huge leap forward in the area of knowledge transfer. But the equivalent leap in the area of evaluation and feedback has not yet taken place.

Professsors who teach MOOCs have experimented with different ways of evaluating the work of the hundreds of thousands of students enrolled in them. Peer evaluation, where students review each other’s work, and automated, computer evaluation of student work have both been tried. Both of these methods surely have some value. They will probably be most effective at evaluating lower-level work, such as checking grammar, syntax or arithmetic. They will be less and less effective for student work at more advanced levels.

For now, at least, attentive, expert evaluation of student work cannot be automated or scaled up using the internet. It is going to remain a somewhat expensive, one-on-one job, and it will be worth paying for because the results of these evaluations provide useful information about and for the students who go through them. Certification agencies, independent of universities, may emerge to examine and evaluate all comers, a la the AP exams for high school students. But the same logic applies. Relatively many people can evaluate a final exam for freshman art history 101; fewer people, mostly professors, can competently evaluate a senior thesis on Picasso and Braque’s development of cubism.

Actually, the wide availability of free MOOCs has every chance of changing professors’ teaching jobs for the better. If we professors can assign students to watch video lectures that cover the basics of the course material, that frees us from the burden of having to go over the same basic topics in every course, and allows us to spend precious class time in a way tailored to the needs of the particular students there—building up their weak points, or going farther with their strong points. Also, if automated programs get better and better at evaluating students’ low-level work (grammar and arithmetic), that leaves us more time to evaluate the higher levels of their work, which is a better use of our time anyway.

What’s more, this unbundling isn’t starting from zero. Most college courses are already partially unbundled in different ways. Every course that has a professor do the lecturing, while teaching assistants provide the evaluation and feedback, is already unbundled in that sense. The availability of MOOCs may transform the professor’s job, but not the TAs’. Likewise, every course where the professor assigns a textbook is already partially unbundled. That same professor can now assign his or her students to watch a MOOC video lecture along with reading the textbook. It is just one more resource available for the students. The professor’s job is still to bring home the course material to the specific group of students in the way that best suits them.

Once the hoopla dies down, it will become apparent that free online lectures provide basically the same thing that textbooks have always provided—focused, directed knowledge from a recognized expert—albeit in a cheaper, more accessible form. Much of the true value of a college course is in the opportunity for intensive tutoring and feedback (whose Platonic ideal might be the tutorial system at Oxford), which will remain scarce and valuable. College courses that mainly concern themselves with knowledge transfer will be disrupted, as they should be, but college courses that provide excellent one-on-one feedback and evaluation will retain their value.

3. The unbundling of college finance

The recent news that total student loan debt in America reached a trillion dollars—that’s $1,000,000,000,000—with a median balance of $12,800 per indebted graduate, focused attention on the issue of student loans. But most discussion of the issue has relentlessly conflated two separate questions: First, what is it worth to pay for college? And second, what is it worth to borrow for college?

There’s no limit at all to what it is worth to pay for college, if the money is available. If students, parents, college aid offices, and scholarship foundations think it’s worth paying a million dollars for a college degree, then nothing will stop them, and there’s nothing wrong with that. If we imagine that ten spots in the Harvard freshman class were to be auctioned off to the highest bidder, in secret, so that no one would know who had paid for their places, we can easily imagine those places going for $1 million or more. If we imagine that a certain course of study is going to lead its graduates to cure cancer, malaria, and tuberculosis, we can easily imagine the government paying millions to fund those degrees.

But what is it worth to borrow for college? That is a completely different question. A moment’s reflection should lead to the conclusion that the only justifiable amount to borrow for college, is the amount that you can expect to afford to repay from your future earnings, and not a penny more.

Recently, the typical starting salary of a college graduate was about $27,000. Depending on assumptions, one rule of thumb is that at the absolute maximum, one’s total loan debt should be no greater than one’s starting salary. Armed with only this information, it defies all reason to argue that the government or a bank should lend much more than this, or that a student should take on much more debt than this, to acquire a typical college degree. And yet, many thousands of students are in exactly this situation. This is the state of affairs that exactly resembles the recent housing bubble, and which can only end in misery.

But of course, we know that some degrees carry expectations of much higher earnings—for example, graduate degrees in medicine, nursing or engineering, not to mention certification as an expert machinist or plumber. Without question, students should be able to borrow much more to acquire these degrees and certificates, corresponding to the expected earnings of each field. The catch is that only some fields are in this situation.What percentage of all degrees and certifications carry expectations of higher-than-average earnings? I don’t know, but probably not the majority.

Given the high cost of college, given that college is subsidized by taxpayers, and given that student loans can become an immense burden on the graduates who may have signed on to an obligation of many thousands of dollars at age eighteen, with little adult experience to guide them in the wisdom of that decision, it is a scandal if the expectation of future earnings does not guide every single decision to borrow or lend money for college.

Don’t, however, lower-paying fields of study have intrinsic value not captured by the future earnings of their graduates? As an art historian, I wholeheartedly agree with this idea. But the only appropriate way to acknowledge this value is for the government, scholarship foundations, college aid offices, parents and students to write checks to pay for this study—not to mortgage the future of young students by making them borrow for it. If art history, religious studies, creative writing, etc., are valuable to individuals and society—and indeed they are—then individuals and society need to pay for them, not borrow for them.

The logic of expected earnings and indebtedness will also help drive the unbundling of college goods discussed in the first section above. If we think about what raises the expected earnings of a college graduate, it must be some combination of the goods 1, 2, and 3: the curriculum, the extracurriculum, and the signaling.

What about category 4, the college experience? It probably has little if any effect on future earnings; it is immensely appealing to students and their parents; and it is quite expensive to provide. Over the long term, this probably means that it will be the province of colleges that attract upper-income students whose parents will pay for the experience, while loans and government subsidies go to colleges that focus on categories 1, 2, and 3.

We could describe this process as the unbundling of college as consumption (category 4), from college as human capital investment (categories 1, 2, and 3). College-as-consumption consists of all the experiences that are valuable and enjoyable to the college student, whereas college-as-investment consists of all the knowledge and skills that make the college student more valuable to society through his or her work. Of course, many times the same experiences that are valuable for a college student to consume are the same ones that build his or her human capital — but not always. Learning a foreign language in a study abroad program is probably both consumption and investment. Eating top-notch food in a top-notch dorm is probably just consumption.

There is one reason, however, why the unbundling of consumption and investment might proceed differently, or more slowly, than the unbundling of knowledge transfer and student evaluation. The reason is that whereas the internet is forcing the unbundling of the college course, it is not doing the same for consumption and investment. And whereas the combination of high costs and indebtedness might force typical colleges to devote more of their resources to providing value in the form of return on students’ human-capital investment, it might not affect top colleges in the same way.

On the contrary, top colleges might be able to continue to use their vast resources (in the words of Kevin Carey: wealth, prestige, and exclusivity) to provide an expensive, valuable college experience (category 4) that helps attract top students, high-paying students, top faculty, and donations, in a self-reinforcing cycle as the rich get richer. This self-reinforcing cycle might very well increase the stratification among colleges, as fewer and fewer colleges are able to “play the game” and attract scarce “stars” among students and faculty. Over recent years, one could argue that this has already been happening, as top public universities in the U.S. are less and less able to compete with top private universities. These top universities provide their students with bundle that includes both a lot of “college experience” to consume, and a high return on their human-capital investment.

But for the vast majority of colleges and students, the unbundling process is probably going to lead to pressure to devote more resources to providing return on human-capital investment, rather than on consumption.

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A very thoughtful piece. Too many people adopt an “either or” stance regarding the internet and post-secondary education. Either colleges will be made obsolete and we can get rid of all those overpriced faculty, or it’s not a particularly big deal – just another tool for teaching.

a big reason why ny and sillicon valley are so expensive to live is because of the huge restrictions on building new houses/apartment buildings. Land use regulation is way too cumbersome in those places. Lots of new people are moving to Texas, yet housing remains cheap.

Very insightful perspective. Thank you for preparing this thoughtful post. It is an extremely interesting topic and infertile ground for anyone without broad and long vision. It will take decades to test these predictions. I am curious if you would respond to some reflections:

There was no mention of the impact of the many, indeed millions, and possibly billions, who until these changes you expect, had no access to higher education. Why wouldn’t the sheer mass of this connected populace overwhelm any theory founded on the conventional outcomes you proscribe? I would contend that, “you ain’t seen nothing yet.” There are more brilliant (and I mean brilliant) people underserved by the global education systems to completely overwhelm the impact of well pedigreed, infinite-tuition-paying, blue bloods in the United States. We all have a story about a genius whose fate led him (happily, I might add) to a vocation as a plumber or home builder. What if a season of hard times didn’t inhibit his ability to realize his potential? I think you underestimate this impact like children dream of becoming an astronaut. It could be true, but encouraging such naivete runs the risk of pure disappointment.

I also think your assessment off the value of the social experience lacks awareness of the macro social trend. “Dad, it will cost you a bundle, but I’ll get a good job and you’ll be so proud of your son, the one who got a 3.2 and learned how to use a beer funnel.” Most parents today are making a serious decision: raid the college fund or put off retirement seven years. I wish that we valued education so much that we could rely on the judgement of the once-was upper middle class. With rising healthcare costs and retirements delayed indefinitely, I think you’ll see that this house is made of sticks.

I could not agree more with your perspectives on value and debt. But this reinforces my prior comments. My kids define what they are good at by what they see and learn from YouTube. I can’t intercede; I’ve tried. It is their new report card, a peer group of a thousand million people. When I was impressionable, it only took Shawn Mazerka to convince me that I needed to have a new dream and a major league baseball contract was not my future. But if I could have played chess with a million people, I may have found a different calling than my immigrant, blue collar parents could not enlighten me to. A million peers is inconceivable to you and me, but not to my son.

When all the investment banking jobs go to online-only grads, Harvard will topple like Borders. (Right after they blow up their endowment, trading for yield when all they had too do was lower tuition.) And don’t think for a second that investment banks would put their elitism before their monopoly on brilliance. They are too brilliant and selfish to consider the long term implications for their alma mater.

One element of bundling is the bundling for consumers. Another element is the bundling for investors (including donors to non-profits and taxpayers for state schools). A third is the bundling for employees. A final kind of bundling involves college sports (an independant, major, funding stream for certain schools) that involves a larger group of consumers than the students or even alumni.

There are quite a few different ways to slice this pie, but most people acknowledge that the current system is broken for most, if not all, parties. Athletes, taxpayers, graduate students…

We will need to explore the impact of unbundling on each of these packaging strategies.

Benjamin
It seems you are not aware of MITx+Harvardx.
MITx is something , MOOC is completely something else .
And I am against MOOCs.
No degree, no certificate, no brand name, unashured quality.

ONLINE education must be made by the best schools in the world .since they have the accumulated wealth of knowledge of 100-150 years
When top schools, such as MIT, go online they attract millions students
Then the cost per person becomes almost nill. Plus MITx provides certificates better than a credit . To provide degrees or diplomas of some kind in the near future .

Be careful MITx is not free like all other MOOCs.
Also these top schools can make huge amount of money with online ..
Imagine today MITx + Harvardx target is 1 billion students.
If they charge only $ 10 per course they can collect $ 10 billion year after year .
( Sure there is a ramp for several years )
Therefore it is sustainable .
That was the vision of MIT but Harvard luckly joined them too .

Yes MITx model is very disrupting to all colleges and all higher education system.
Imagine you do not need LOANS . You can go college at home. Best one .
Professors should direct themselves to research universities ,

This MITx model solves not only USA higher education problem but also the higher education problems of the world . Therefore world will be indebted to USA.

Just TECHNOLOGY. And this technology is best used by MIT so far .
First course had been attended by 155,000 students, and there were several hundred MITx clubs around the world to correpond among attendees . There were a real social gathering.
Some at the same location also had beer parties too . May be some will set up some sailing clubs as well .

I say MITx model is a revolution in Higher education
It is not free, it finances itself very highly
It is the best quality in the world
Online researches are continuing, therefore quality will be even better
It is the right model, see even Harvard is following MIT
I hope Stanford and Yale will join the club soon .

It is really very very disrupting. Therefore it will collect many enemies and opponents .

Finally, we , employers, are the net evaluators of any college.
If we hire the graduates of a college, that means it is good .
We hire all MITx certificate holders and degrees later.

Joe, thank you for the comment. I completely agree that the millions who have been shut out now have incredible opportunities, and we all will benefit. If the next Thomas Edison is in a slum somewhere with an internet connection, he or she now has a much better chance. I just wanted to focus on the existing institutions, from the perspective of someone within the system.

I thought it was very revealing that in Sebastian Thrun’s online computer science course, the top 410 students were NOT Stanford students. The top Stanford student was number 411. There are countless talents who had been shut out of the system, who now have opportunity. At the same time, I wouldn’t be surprised if the average score of the few hundred Stanford students in that course was much higher than the average score of all the online students. It might be only a small minority of all online students who are motivated and talented enough to truly excel, but that nonetheless will have a big impact.

Good point about the college experience, although I would also include things like late-night meaning-of-life conversations, not just beer funnels, that parents might be more willing to pay for. But I really meant to refer to the tiny slice of “top” colleges that receive such a disproportionate amount of attention. Let’s say there are 20,000 freshmen in the top colleges in the U.S every year. There are about 1.5 million households in the top 1 percent of income, with high six figures annually. These colleges have hundreds(?) of billions of dollars of endowment altogether. I argue that all of that household wealth and endowment wealth is still going to go towards a “college experience” for an elite few, although I agree that it will get harder and harder for even the typical upper-middle-class household.

I-banking is an interesting example. My hunch is that “hacker” or “quant” type jobs, whether in software, biotech or finance, will continue to go to those with pure “smarts,” more and more accessible to online-only grads, less and less networking needed. But it also seems that many of the new jobs these days are in fields where “people skills,” networking, client relations, etc., are important (i.e. personal trainer?), and/or in fields where you need hands-on, in-person training (nursing, oil-rig operation), and for those it’s hard to believe that online-only training would be enough.

Muvaffak, thank you for the comment. That is very exciting. I am especially glad that some of the students set up beer parties and sailing clubs.

I think some of the issues I discussed would also apply to MITx. Specifically, how does the university evaluate advanced, upper-level student work? On the website, it says the courses offer “video lesson segments, embedded quizzes, immediate feedback, student-ranked questions and answers, online laboratories, and student paced learning.” It seems that would work better for introductory courses, than for advanced research, like an undergraduate senior thesis.

Also, don’t students usually need physical access to a laboratory, or library, to do their research? I understand that computer science would be a big exception to that rule.

If upper-level undergraduate research needs to be evaluated individually by professors, then that is one aspect of learning that cannot be massively scaled up to 1 billion students. However, in a field like CS that does not require physical presence, I can see that students from all over the world could enroll in the same classes. You would still need to increase the number of professors.

Thoroughly interesting article!
I do have one question though: how different are ‘extra-curriculum’ and ‘ college-experience’ as goods? The way I see it they are too closely related to justify viewing them separately.

Thank you for the comment! What I mean is that participation in the “extracurriculum” can develop skills in the area of leadership, management, communication, social skills, etc. These are valuable forms of human capital, which might be distinct from the forms of human capital developed in academic classes.

I am thinking of a graduate who is more valuable as a job candidate because of his or her experience as publisher of the campus newspaper, manager of the snack-food concession, etc. These experiences of course overlap with the “college experience” but are not the same thing.

For example, simply attending the football games is part of the “college experience,” whereas actually playing on the football team would be a valuable part of the “extracurriculum” because it develops discipline, teamwork, motivation, etc.

Nice post. Random thoughts. The Swiss and Israeli military (life-time) service accomplish much of the cross-cutting group socialization, leverage-for-life. Khan, Jump Math, others are (struggling) to bring a social fabric to their experiences – in Khan’s case to yield the dynamics of a one room schoolhouse – where students teach students and teachers coach (turning teaching back into a profession, imo).

Which is perhaps one path – bringing the attributes of athletics to education. Personal best. Intra-team competition. Inter school competitions, then international, etc.. all as a form of signaling – “how did you do in the games?” – where most employers are happy with less-than-the-best given the best’s price.

And no one can represent an athlete’s abilities better than their coaches, including the supremely important “intellect AND judgment” question – where I personally favor judgment over smarts in broad categories – where teams must be led. As part of these competition (in at least the physical disciplines) the contestants could compete on creating new questions, techniques, practical demonstrations that quickly expands to a corpus that illuminates the domain in a manner where grade/rank/competitive-wins no longer demonstrate (just) test-taking ability.

It seems to me (and I trust I’m not alone) that to define your category 1 in terms of one-way information transfer is to reduce it too much. The traditional classroom, especially when it’s as they say “flipped,” facilitates a transactional process whereby knowledge is constructed cooperatively, ideally resulting in a working grasp of subject matter, tending toward professionalism in its positive sense. The open net would work great if the real deal were comprised of a zillion factoids, but it isn’t.

I actually would describe the traditional classroom as a combination of first, transfer of knowledge and second, evaluation and feedback. In my conceptual scheme, what you describe as cooperative construction of knowledge is partly equivalent to what I call evaluation and feedback.

I cite the Oxford-type tutorial as a model, i.e. the personalized conversation and interaction between teacher and student, which I view as an occasion for intensive, high-frequency evaluation and feedback. Every time the student makes an assertion or a proposal, the teacher responds, i.e. with a critique, suggestion for further research, or follow-up idea. So one class meeting consists of a conversation between student and teacher, including dozens of occasions for evaluation and feedback. In the future, this can take place over Skype, say, but it still requires a low student-to-teacher ratio and can’t be scaled up massively.

I have published three articles on the unbundling of higher education (the first in 1975; most are available through an internet search): “The Unbundling of Higher Education,” 1975 Duke Law Journal 53. “The Dismantling of Higher Education,” published in two parts in 29 Improving College and… Read more University Teaching 55 (1981) and 29 Improving College and University Teaching 115 (1981) “The Restructuring of Legal Education Along Functional Lines,” 17 Journal of Contemporary Legal Issues 331 (2008)(discusses legal education, but applies to higher education generally); abstract below

THE RESTRUCTURING OF LEGAL EDUCATION, by William K.S. Wang

ABSTRACT

Currently, law schools tie together five quite distinct services in one package, offered to a limited number of students. These five functions are: (1) impartation of knowledge, (2)counseling/placement, (3) credentialing (awarding grades and degrees), (4) coercion, and (5) club membership. Students do not have the opportunity to pay for just the services they want, or to buy each of the five services from different providers.

This article proposes an “unbundled” system in which the five services presently performed by law schools would be rendered by many different kinds of organizations, each specializing in only one function or an aspect of one function. Unbundling of legal education along functional lines would substantially increase student options and dramatically increase competition and innovation by service providers. This offers the hope of making available more individualized and better instruction and giving students remarkable freedom of choice as to courses, schedules, work-pace, instructional media, place of residence, and site of learning. Most importantly, this improved education would be available on an “open admissions” basis at much lower cost to many more individuals throughout the nation, or even the world.

In order to explain how to restructure the existing law school system, this article will discuss the five educational services presently performed by law schools, the disadvantages of tying these services together, a hypothetical unbundled world of legal education, the advantages of the unbundled system, answers to some possible objections to the system, and some recent developments in the use of technology and distance learning in law schools.

The main theme of this article is the advantage of unbundling. A more modest sub-theme is the benefit of use of technology and distance learning.